According to this recent article over on CNNMoney.com on how emerging markets are hot, total sales are expected to rise an average 10% among S&P 500 companies that derive more than half of their revenues overseas. In comparison, we’re expecting just a 6% uptick in total sales for companies that draw a majority of sales from the US, where GDP grew a paltry 2.9% last year.
Growth is skyrocketing across the BRIC, where Russia saw 4% growth, Brazil 8.4%, and China 10.3% last year. And this growth is expected to continue. But growth in these countries comes with challenges. China has pockets of prosperity among wide expanses of poverty. Russia is also vast and most of the profit to be made is on lower-end consumer goods. Brazil still has large pockets of poverty, serious problems with drugs and weapons struggling, and only easily reachable coastal areas. In other words, in each of these countries logistics outside of a few areas makes North American distribution look like child’s play in comparison, violence can be a constant threat in poorer areas, and relative lack of wealth among the population at large compared to the US (and UK) makes price control a huge issue.
So, is your emerging supply chain ready for growth (and the distribution challenges that lie ahead)?